The FY10 all India direct tax collections saw a significant shortfall of Rs 9,000 crore. This is expected to widen the fiscal deficit at a time when the Finance Ministry is yearning for much-needed revenue flexibility. Media reports on what hit the collections.
According to government sources, there are five significant reasons that have contributed to this revenue shortfall.
First, there were huge refunds of Rs 22,000 crore issued in financial year 2009-10 as against Rs 12,000 crore last fiscal. Second, tax deducted at source (TDS) rate deductions in October hit TDS collections.
Third, pending demands are locked in dispute resolution. These demands are in excess of Rs 6,000 crore. The Income Tax Department is unable to finalise assessments on pending demands.
Fourth, with the government not issuing oil bonds or subsidies in FY10, payments from oil marketing companies have been hit. Finally, lacklustre fourth quarter advance tax from foreign banks also led to the shortfall.
The all India direct tax shortfall for FY10 stands at Rs 9,000 crore. All India collections for FY10 stands at Rs 3,78,000 crore against a target of Rs 3,87,000 crore. The shortfall in the Mumbai circle itself stood at Rs 6,000 crore.